Is Open Data a goldmine for development?

Submitted by Oleg Petrov
On Thu, 07/17/2014

co-authors: Andrew Stott, Roger Burks [1]

Open Data could be a “Swiss Army Knife” for modern government - a multi-use tool that can be used to increase transparency and accountability, to improve public services, to enhance government efficiency and to stimulate economic growth, business innovation and job creation.

The economic growth opportunity has certainly caught imaginations around the world. The Economist recently likened Open Data’s commercial potential to ‘a new goldmine.’ The McKinsey Global Institute estimated potential economic benefits[2] of at least $3 trillion a year globally, and a recent study[3] for the Omidyar Network by Lateral Economics suggested that, for G20 economies, Open Data could help increase output by $13 trillion cumulatively over the next five years.

Other studies have suggested figures which are lower but still mouth-watering, especially for economies emerging from recession or facing anaemic growth. These are topics we will discuss at a World Bank-sponsored event on July 23, titled “Can Open Data Boost Economic Growth and Prosperity?”[4]

While Open Data is still an emerging practice, estimates are now being turned into hard evidence, with hundreds of firms in the United States alone now having business models with Open Data as a key input. At least five Open Data-driven firms that did not exist 10 years ago now have valuations of more than $1 billion. What’s more, different firms have evolved different models to use Open Data: some businesses are organizing and aggregating data, others are adding value to it, and still others are mining it for advisory and financial services to other businesses.

Sectors such as transport are already visible beneficiaries with, for instance, 500 applications using London Transport data alone (and employing 5,000 people to develop and support them). Less obvious sectors are also benefiting, including benefits of $20 billion a year so far to U.S. agriculture from GPS and other open geospatial data, and a further $13 billion available if all relevant farmers in the U.S. adopted Open Data-driven precision agriculture techniques where appropriate.

Open Data’s value in increasing transparency and accountability – and therefore improving governance – is already recognised as important to the World Bank’s twin goals of reducing poverty and increasing shared prosperity. However, could it also contribute through increasing economic growth and creating sustainable jobs, another key mechanism for reducing poverty and increasing prosperity?

Are these economic growth possibilities open to all countries, or are they largely applicable only to high-income countries with economies already based on advanced technologies?

Which sectors most important to developing countries can benefit from Open Data, and how can this happen? How “data ready” are these sectors, and what impact will existing programs have on this?

Which types of data can have the most impact – and most credibly – across developing country economies as a whole? It’s known, for instance, that geospatial data can permeate many sectors of the economy and improve efficiency and decision-making there.

What factors in developing countries should be considered in assessing the achievability of economic benefits and what is the timescale for achievement?

What do developing countries need to do[5] in order to maximize the economic potential of open data? Even the Governments of the United Kingdom and the U.S., leading early movers in Open Data, have come to see as important not only to releasing data, but also to facilitating and supporting the use of their data by business.

What should be the role of the World Bank and other development partners? How can World Bank projects be “turbocharged” with open data?

The event will start with discussion about the latest evidence on the economic benefits of Open Data and the ways in which businesses are forming or adapting to exploit the opportunity. I will be participating in these discussions, as well as presentations by fellow Open Data experts including:

Amparo Ballivián, Lead Economist and Task Manager, Partnership for Open Data, World Bank

Jeff Kaplan, Director of Multilateral and NGO, Socrata

Daniel Castro, Director, Center for Data Innovation

This event is part of a series of Open Data seminars hosted by World Bank’s Digital Development community of practice, which will continue later this year with the next major Open Data event in early September. Please plan to join us on July 23, in person or online[4], and bring your ideas and questions about the future of Open Data.